Evercore Reports Third Quarter 2023 Results; Quarterly Dividend of $0.76 Per Share

NEW YORK–(BUSINESS WIRE)–Evercore Inc. (NYSE: EVR):

Evercore Inc. (NYSE: EVR) today announced its results for the third quarter ended September 30, 2023.

LEADERSHIP COMMENTARY

John S. Weinberg, Chairman and Chief Executive Officer, “We are encouraged by some of the positive leading indicators we see both internally and in the market. And while the normalization of market activity will continue to take time, we remain focused on serving our clients and building for the long term.”

Roger C. Altman, Founder and Senior Chairman, “Evercore just completed the largest, external hiring surge, at the SMD level, in the Firm’s history. And, this came on top of aggressive hiring in each recent year, which means that our productive capacity is at an all-time high.”

Evercore’s quarterly results may fluctuate significantly due to the timing and amount of transaction fees earned, as well as other factors. Accordingly, financial results in any particular quarter may not be representative of future results over a longer period of time.

Business Segments:

Evercore’s business results are categorized into two segments: Investment Banking & Equities and Investment Management. Investment Banking & Equities includes providing advice to clients on mergers, acquisitions, divestitures and other strategic corporate transactions, as well as services related to securities underwriting, private placement services and commissions for agency-based equity trading services and equity research. Investment Management includes Wealth Management and interests in private equity funds which are not managed by the Company, as well as advising third-party investors through affiliates. See pages A-2 to A-7 for further information and reconciliations of these segment results to our U.S. GAAP consolidated results.

Non-GAAP Measures:

Throughout this release certain information is presented on an adjusted basis, which is a non-GAAP measure. Adjusted results begin with information prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and then those results are adjusted to exclude certain items and reflect the conversion of certain Evercore LP Units into Class A shares. Evercore believes that the disclosed adjusted measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare Evercore’s results across several periods and facilitate an understanding of Evercore’s operating results. Evercore uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.

Special Charges, Including Business Realignment Costs, have been excluded from Adjusted Net Income Attributable to Evercore Inc. These charges in 2023 relate to the write-off of non-recoverable assets in connection with the wind-down of the Company’s operations in Mexico.

Evercore’s Adjusted Diluted Shares Outstanding for the three and nine months ended September 30, 2023 were higher than U.S. GAAP as a result of the inclusion of certain Evercore LP Units and Unvested Restricted Stock Units.

Further details of these adjustments, as well as an explanation of similar amounts for the three and nine months ended September 30, 2022 are included in pages A-2 to A-7.

Selected Financial Data – U.S. GAAP Results

The following is a discussion of Evercore’s consolidated results on a U.S. GAAP basis. See pages A-4 to A-6 for our business segment results.

Net Revenues

Advisory Fees – Third quarter Advisory Fees decreased $20.8 million, or 4%, year-over-year, and year-to-date Advisory Fees decreased $384.5 million, or 23%, year-over-year, reflecting a decrease in the number of advisory fees earned and a decline in revenue earned from large transactions during 2023.

Underwriting Fees – Third quarter Underwriting Fees increased $2.1 million, or 7%, year-over-year. Year-to-date Underwriting Fees increased $13.4 million, or 17%, year-over-year, reflecting an increase in the number of transactions we participated in due to the increase in equity issuance activity.

Commissions and Related Revenue – Third quarter Commissions and Related Revenue decreased $0.5 million, or 1%, year-over-year, and year-to-date Commissions and Related Revenue decreased $5.8 million, or 4%, year-over-year, primarily reflecting lower trading revenues.

Asset Management and Administration Fees – Third quarter Asset Management and Administration Fees increased $1.7 million, or 11%, year-over-year, driven by an increase in fees from Wealth Management clients, as associated AUM increased 13%, primarily from market appreciation. Year-to-date Asset Management and Administration Fees increased $1.1 million, or 2%, year-over-year, driven by an increase in fees from Wealth Management clients, as associated AUM increased 13%, primarily from market appreciation.

Other Revenue – Third quarter Other Revenue, net, increased $10.8 million year-over-year, primarily reflecting higher returns on our fixed income investment portfolios, which primarily consist of U.S. treasury bills. Year-to-date Other Revenue, net, increased $86.9 million year-over-year, primarily reflecting a shift from losses of $39.0 million in 2022 to gains of $17.4 million in 2023 on our investment funds portfolio due to overall market appreciation, as well as higher returns on our fixed income investment portfolios, which primarily consist of U.S. treasury bills. The investment funds portfolio is used as an economic hedge against our deferred cash compensation program.

Expenses

Employee Compensation and Benefits – Third quarter Employee Compensation and Benefits increased $35.9 million, or 10%, year-over-year, reflecting a compensation ratio of 68.7% for the third quarter of 2023 versus 61.7% for the prior year period. The Compensation Ratio was impacted by lower net revenues, as described above, during the current year period compared to the prior year period. The increase in Employee Compensation and Benefits compared to the prior year period principally reflects a higher accrual for incentive compensation, as well as higher amortization of prior period deferred compensation awards and higher base salaries. Year-to-date Employee Compensation and Benefits decreased $77.5 million, or 7%, year-over-year, reflecting a year-to-date compensation ratio of 66.8% versus 60.8% for the prior year period. The Compensation Ratio was impacted by lower net revenues, as described above, during the current year period compared to the prior year period. The decrease in Employee Compensation and Benefits compared to the prior year period principally reflects a lower accrual for incentive compensation, partially offset by higher amortization of prior period deferred compensation awards and higher base salaries. See “Deferred Compensation” for more information.

Non-Compensation Costs – Third quarter Non-Compensation Costs increased $10.9 million, or 12%, year-over-year, primarily related to the reversal of expense in the third quarter of 2022 associated with the decline in fair value of contingent consideration owed to former equity interest holders in our RECA business. The increase was also attributed to an increase in communications and information services, primarily reflecting higher research expenses and license fees in the third quarter of 2023. The third quarter Non-Compensation ratio of 17.8% increased from 15.7% for the prior year period. Year-to-date Non-Compensation Costs increased $30.7 million, or 11%, year-over-year, primarily related to increases in travel and related expenses, as well as communications and information services, primarily reflecting higher license fees and research expenses in 2023. The increase was also attributed to the reversal of expense in 2022 associated with the decline in fair value of contingent consideration owed to former equity interest holders in our RECA business. The year-to-date Non-Compensation ratio of 18.3% increased from 14.0% for the prior year period. The Non-Compensation Ratio was also impacted by lower net revenues, as described above, during the current year period compared to the prior year period.

Special Charges, Including Business Realignment Costs – Year-to-date 2023 Special Charges, Including Business Realignment Costs, relate to the write-off of non-recoverable assets in connection with the wind-down of the Company’s operations in Mexico.

Year-to-date 2022 Special Charges, Including Business Realignment Costs, relate to charges associated with the prepayment of the Company’s $67 million aggregate principal amount of its 5.23% Series B senior notes, originally due March 30, 2023 (the “Series B Notes”), during the second quarter, as well as certain professional fees related to the wind-down of the Company’s operations in Mexico.

Effective Tax Rate

The third quarter effective tax rate was 25.1% versus 30.8% for the prior year period. The year-to-date effective tax rate was 21.5% versus 23.2% for the prior year period. The effective tax rate is principally impacted by the deduction associated with the appreciation in the Firm’s share price upon vesting of employee share-based awards above the original grant price. The year-to-date provision for income taxes for 2023 reflects an additional tax benefit of $14.1 million versus $19.7 million for the prior year period, due to the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price.

Selected Financial Data – Adjusted Results

The following is a discussion of Evercore’s consolidated results on an Adjusted basis. See pages 3 and A-2 to A-7 for further information and reconciliations of these metrics to our U.S. GAAP results. See pages A-4 to A-6 for our business segment results.

Adjusted Net Revenues

See page 4 for additional business metrics.

Advisory Fees – Third quarter adjusted Advisory Fees decreased $21.1 million, or 4%, year-over-year, and year-to-date adjusted Advisory Fees decreased $385.1 million, or 23%, year-over-year, reflecting a decrease in the number of advisory fees earned and a decline in revenue earned from large transactions during 2023.

Underwriting Fees – Third quarter Underwriting Fees increased $2.1 million, or 7%, year-over-year. Year-to-date Underwriting Fees increased $13.4 million, or 17%, year-over-year, reflecting an increase in the number of transactions we participated in due to the increase in equity issuance activity.

Commissions and Related Revenue – Third quarter Commissions and Related Revenue decreased $0.5 million, or 1%, year-over-year, and year-to-date Commissions and Related Revenue decreased $5.8 million, or 4%, year-over-year, primarily reflecting lower trading revenues.

Asset Management and Administration Fees – Third quarter adjusted Asset Management and Administration Fees increased $1.6 million, or 9%, year-over-year, primarily driven by an increase in fees from Wealth Management clients, as associated AUM increased 13%, primarily from market appreciation. Year-to-date adjusted Asset Management and Administration Fees decreased $0.4 million, or 1%, year-over-year, driven by a 27% decrease in equity in earnings of affiliates, primarily driven by lower income earned by Atalanta Sosnoff in 2023. The decrease was partially offset by an increase in fees from Wealth Management clients, as associated AUM increased 13%, primarily from market appreciation.

Other Revenue – Third quarter adjusted Other Revenue, net, increased $10.8 million year-over-year, primarily reflecting higher returns on our fixed income investment portfolios, which primarily consist of U.S. treasury bills. Year-to-date adjusted Other Revenue, net, increased $88.0 million year-over-year, primarily reflecting a shift from losses of $39.0 million in 2022 to gains of $17.4 million in 2023 on our investment funds portfolio due to overall market appreciation, as well as higher returns on our fixed income investment portfolios, which primarily consist of U.S. treasury bills. The investment funds portfolio is used as an economic hedge against our deferred cash compensation program.

Adjusted Expenses

Employee Compensation and Benefits – Third quarter adjusted Employee Compensation and Benefits increased $35.9 million, or 10%, year-over-year, reflecting an adjusted compensation ratio of 68.0% for the third quarter of 2023 versus 61.0% for the prior year period. The adjusted Compensation Ratio was impacted by lower net revenues, as described above, during the current year period compared to the prior year period. The increase in Employee Compensation and Benefits compared to the prior year period principally reflects a higher accrual for incentive compensation, as well as higher amortization of prior period deferred compensation awards and higher base salaries. Year-to-date adjusted Employee Compensation and Benefits decreased $77.5 million, or 7%, year-over-year, reflecting a year-to-date adjusted compensation ratio of 66.1% versus 60.3% for the prior year period. The adjusted Compensation Ratio was impacted by lower net revenues, as described above, during the current year period compared to the prior year period. The decrease in Employee Compensation and Benefits compared to the prior year period principally reflects a lower accrual for incentive compensation, partially offset by higher amortization of prior period deferred compensation awards and higher base salaries. See “Deferred Compensation” for more information.

Non-Compensation Costs – Third quarter adjusted Non-Compensation Costs increased $10.9 million, or 12%, year-over-year, primarily related to the reversal of expense in the third quarter of 2022 associated with the decline in fair value of contingent consideration owed to former equity interest holders in our RECA business. The increase was also attributed to an increase in communications and information services, primarily reflecting higher research expenses and license fees in the third quarter of 2023. The third quarter adjusted Non-Compensation ratio of 17.6% increased from 15.6% for the prior year period. Year-to-date adjusted Non-Compensation Costs increased $30.7 million, or 11%, year-over-year, primarily related to increases in travel and related expenses, as well as communications and information services, primarily reflecting higher license fees and research expenses in 2023. The increase was also attributed to the reversal of expense in 2022 associated with the decline in fair value of contingent consideration owed to former equity interest holders in our RECA business. The year-to-date adjusted Non-Compensation ratio of 18.1% increased from 13.8% for the prior year period. The Non-Compensation Ratio was also impacted by lower net revenues, as described above, during the current year period compared to the prior year period.

Adjusted Effective Tax Rate

The third quarter adjusted effective tax rate was 27.6% versus 27.4% for the prior year period. The year-to-date adjusted effective tax rate was 22.5% versus 22.8% for the prior year period. The adjusted effective tax rate is principally impacted by the deduction associated with the appreciation in the Firm’s share price upon vesting of employee share-based awards above the original grant price. The year-to-date adjusted provision for income taxes for 2023 reflects an additional tax benefit of $15.0 million versus $20.2 million for the prior year period, due to the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price.

Liquidity

The Company continues to maintain a strong balance sheet. As of September 30, 2023, cash and cash equivalents were $492.6 million, investment securities and certificates of deposit were $1.1 billion and current assets exceeded current liabilities by $1.6 billion. Amounts due related to the Notes Payable were $372.4 million at September 30, 2023.

Headcount

As of September 30, 2023 and 2022, the Company employed approximately 2,230 and 2,160 people, respectively, worldwide.

As of September 30, 2023 and 2022, the Company employed 175⁽¹⁾ and 169⁽²⁾ total Senior Managing Directors, respectively, in its Investment Banking & Equities segment, of which 137⁽¹⁾ and 130⁽²⁾, respectively, were Advisory Senior Managing Directors.

Contacts

Investor Contact:
Katy Haber

Head of Investor Relations & ESG

[email protected]

Media Contacts:
Jamie Easton

Head of Communications & External Affairs

[email protected]

Shree Dhond / Zach Kouwe

Dukas Linden Public Relations

[email protected]
(646) 722-6531

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